Up seven-fold to $29.5bn, gaming platform Roblox’s valuation gain over the past 13 months has been supersized. After raising $520m in its latest funding round, it can now avoid the traditional route to public markets. Without need for fresh capital, the company plans to go public via a direct listing.
The switch is good news for existing private shareholders, who can sell their shares directly to the market. For prospective investors, however, the benefits are less clear cut.
Roblox, a platform that lets users build games and virtual worlds using Lego-like bricks, is another standout pandemic winner. Daily users grew about 80 per cent to more than 31.1m in the first nine months of 2020, as lockdowns encouraged children to spend even more time online. These users — most aged 12 and younger — spent more than 22bn hours on the platform over the period.
The software is free. Roblox makes money when players spend real world cash for Robux, the in-game currency that can be used to buy items for avatars. The company sold almost $1.2bn worth of this virtual currency in the nine months to September.
Even so, losses have swelled along with revenues. The company made a net loss of $203m in the first three quarters of 2020 on revenues of $589m. That exceeds by four times its $46m loss on sales of $350m in the same period of 2019, as it tries to draw in more players.
In the background are concerns from parent groups about its potentially addictive nature — a problem that could become acute with rising popularity.
As is often the case when it comes to red-hot technology stocks, investors may ultimately ignore those issues. User and sales growth matter most. Unity, a rival lossmaking games engine, raised $1.3bn at a $13.6bn valuation in its September IPO. Its stock has since more than doubled, giving it a market value of $37bn. Roblox investors will hope for a similar prize.
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